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Govt offers tax relief to SSIs

New Delhi, Aug. 28 (PTI): The government today announced tax relief to some items of the small-scale sector including bicycle parts, ball and roller industries, and said the proposed value-added tax system from April 2003 would further benefit the sector.

“We will take an encouraging and sympathetic view of the problems of SSIs. We have set up a task force on both direct and indirect taxes, which will look into the problems. The recommendations will be of great help to the sector,” finance minister Jaswant Singh said at the annual SSI convention here.

He said most of the SSIs would also benefit from VAT, scheduled to be implemented from April 2003. “About 90 per cent of the work has been completed. As soon as VAT is implemented, many SSIs will also be benefited,” Singh said.

The minister also announced that the government would restore the investment limit on ball and roller industries to Rs 1.0 crore from Rs 25 lakh, as demanded by the sector. The ministry is also looking at extending excise exemption to electronic toy industry.

Hand-processing sectors will also get exemptions as enjoyed before the budget announcement for 2002-03, he added.

The government reduced excise exemption on hand-processing to only three processes— mainly scouring, hydro-extraction and calendering— in the last Budget.

Singh said the relaxation in payment of duties by the bicycle industry would be made effective immediately.

The Department of Company Affairs was also examining the feasibility of a limited partnership Act, which intends to limit the liability of a partner in an SSI company to the equity only.

Singh said that whenever an SSI company avails of Cenvat facility, it has to pay at a concessional rate of 60 per cent of the credit. Moreover, the government had in the past announced relief on various accounts including for technology upgradation while asking banks to step up credit to the sector without stressing on collaterals.

SSI minister Vasundhara Raje said the sector was being “unfairly blamed and targeted” on the excise issue despite its meagre contribution to the central revenue. “The tinkering done each year with the SSI excise exemption scheme, such as taxing an item or reducing the limit to Rs 25 lakh as in ball bearings actually results in a very marginal increase in revenue as far as the government is concerned, but creates more hurdles for industry,” she said.

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